New legislation could help municipalities

June 28, 2013

State legislators deserve credit for two proposals that were passed Friday. They will not solve the financial problems of local municipalities, but they are a step in the right direction.

In an agreement publicly announced by Gov. Andrew Cuomo and legislative leaders June 18, they agreed to create a state Financial Restructuring Board to advise local governments on how to cut expenses and streamline services.

Any municipality, not including New York City, deemed fiscally eligible by the board would be eligible to request review by and assistance from the board. The board will make recommendations to these municipalities on improving fiscal stability, management and the delivery of public services, and to provide awards of up to $5 million per municipality through the Local Government Performance Efficiency Program.

While streamlining government is great, a key for local municipalities - now and in the future - will be holding down costs.

Officials statewide have complained for years that one key problem involves binding arbitration - chiefly, the arbitration panels that reward public employees despite the fiscal problems of the municipalities they work in.

Despite tough financial times for taxpayers statewide, arbitration panels have given out base salary increases of 3.6 percent a year from 2003 to 2007 and 3.3 percent from 2008 to 2012, according to a May study by the Empire Center for New York State Policy. Only four out of 136 arbitrations included a pay freeze in any year. Most employers sought cost savings on health insurance benefits, but less than half the arbitration awards included such changes, the study shows.

Bills endorsed by Gov. Cuomo also were approved by the Senate and Assembly on Friday will force arbitration panels to consider a municipality's ability to pay as long as the municipality is deemed to be financially distressed.

The bill states a municipality is financially distressed if it has a fund balance of less than 5 percent of its budget and a full-value property tax rate greater than 75 percent of similar municipalities over five years. According to the Empire Center, 56 of 61 New York cities and nearly half of the villages with a police department and paid firefighters qualify as fiscally distressed.

Locally, Franklin County was rated the third-most fiscally strained municipality in New York, according to a study recently released by the state comptroller's office. Recent progress in relations with Mohawk tribal leaders could result in overdue tax and casino payments and thereby lessen the strain significantly, but that won't mean the county will be sitting pretty.

Likewise, the change to the binding arbitration process and the financial restructuring board are not going to solve any municipalities' fiscal problems by themselves.

However, they are positive steps that could help local municipalities and taxpayers. It is up to our local governments to try to take advantage of what is being offered.